Self-Understanding for Opportunity Creation
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Neck1ePPT11.pptxChapter 11: Learning From Failure
11.1
Describe failure and its effect on entrepreneurs.
11.2
Identify several reasons for failure.
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Learning Objectives
11.3
Describe the significance of “grit” and its role in building tolerance for failure.
11.4
Explain the different ways entrepreneurs can learn from failure.
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Learning Objectives
11.5
Describe the significance of “grit” and its role in building tolerance for failure.
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Learning Objectives
Notable Quote
“Nine out of ten businesses fail; so I came up with a foolproof plan — create ten businesses.”
Robert Kiyosaki, American author and businessman
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Eric Wagner, “9 Lessons From a 10-Time Startup Failure,” Forbes (October 22, 2013) http://www.forbes.com/sites/ericwagner/2013/10/22/9-lessons-from-a-10-time-startup-failure/ retrieved on December 12, 2015.
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11.1 Failure and Entrepreneurship
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What is Failure?
A business failure is generally conceived as the termination of a commercial organization that has missed its goals and failed to achieve investors’ expectations.
Failure and Entrepreneurship
PROS
Intensifies cognitive process
Learning resulting in improvements
Motivation to start another venture
CONS
Financially costly
Emotionally painful
Can decrease inclination for risk-taking
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Effects of Failure
Failure and Entrepreneurship
Imagine one or more failure scenarios for a business of your own. How do you think you would respond to the threat of failure?
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Figure 11.1: The Top 20 Reasons Startups Fail
Credit: CB Insights https://www.cbinsights.com/blog/startup-failure-reasons-top/
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Entrepreneurs Share Their Reasons for Failure
Psyche “Mistakes”
Waiting Too Long Mistakes
Hiring Mistakes
Failure and Entrepreneurship
Eleanor Rae Carman, “Successful Entrepreneurs Reveal Their Biggest Mistakes,” FounderDating (June 25, 2015) http://founderdating.com/successful-entrepreneurs-reveal-biggest-mistakes/ retrieved on December 12, 2015.
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11.2 The Failure Spectrum
Table 11.1: Entrepreneurs Share Their Reasons for Failure
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Source: Eleanor Rae Carman, E. R. (2015, June 25). Successful entrepreneurs reveal their biggest mistakes. FounderDating. Retrieved from http://founderdating.com/successful-entrepreneurs-reveal-biggest-mistakes/
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The Failure Spectrum
Deviance—Napster
Inattention—AudienceBloom
Lack of ability—Nibletz
Process inadequacy—Ayloo
Uncertainty—Intellibank
Exploratory experimentation—ShortStack
Cope, Jason. “Entrepreneurial learning from failure: An interpretative phenomenological analysis,” Journal of Business Venturing (November 2011). Vol. 26, Issue 6 pp. 604-623. http://www.dge.ubi.pt/msilva/Papers_MECE/Paper_5.pdf retrieved on December 14, 2015.
Mack, Stan. “What is the meaning of ethical responsibility?” Chron. (n.d.) http://smallbusiness.chron.com/meaning-ethical-responsibility-56224.html
Wang, Jennifer. “How 5 successful entrepreneurs bounced back after failure,” Entrepreneur (January 23, 2013). https://www.entrepreneur.com/article/225204
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Figure 11.2: The Failure Spectrum
Source: Adapted from Amy C. Edmondson, Strategies for Learning from Failure, Harvard Business Review, April 2011. https://hbr .org/2011/04/strategies-for-learning-from-failure
11.3 Fear of Failure
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Failure Often Brings
Pain
Humiliation
Shame
Guilt
Self-blame
Anger
Fear of Failure
Despite the learning and opportunities that may arise from perceived failures, many of us view failure in a negative way and try our best to avoid it. This is because the concept of failure provokes an emotional reaction or anti-failure bias which inhibits us from learning from the experience. This causes us to put the failure out of our minds rather than tackling the reasons behind it.
Shepherd, D. A. (2003) Learning from business failure: Propositions of grief recovery for the self-employed. Academy of Management Review, 28(2): 318-328. Mcgrath, R. (1999) Falling forward: Real options reasoning and entrepreneurial failure. Academy of Management Review, 24: 13-30.
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What Entrepreneurs Must Do
Separate personal and professional failure
Accept failure as a part of the learning process
Admit mistakes and move forward
Fear of Failure
For entrepreneurs, failure is especially difficult because it is hard to separate personal failure from professional failure given how closely associated the identity of the business is tied to the identity of the entrepreneur. Featured entrepreneur, Tom Hatten, founder of Mountainside Fitness is a good example of an entrepreneur who is so emotionally attached to his business that he is willing to persevere rather than let it go.
What Tom Hatten, Mikkel Svane and many successful entrepreneurs have realized is that it is acceptable and human to try and fail. Feelings of doubt, uncertainty, frustration, and a yearning for help are all perfectly normal. Svane believes that it is possible to recover and learn from failure when we feel comfortable enough to make and admit our mistakes; in which case “failing is ultimately just another step on the road to success.” Yet, before entrepreneurs are able to move forward or even start their businesses, they need to first overcome their fear of failure.
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Would you agree that entrepreneurs have an emotional connection to their businesses? Why/Why not?
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What steps would you take to get over the loss or failure of a business?
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Table 11.2: 10 Signs You Might Have a Fear of Failure
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Source: Adapted from Winch, G. (2013, June 18). 10 Signs that you might have fear of failure. Psychology Today. Retrieved from https://www.psychologytoday.com/blog/the-squeaky-wheel/201306/10-signs-you-might-have-fear-failure
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Global Fear of Failure: The GEM Study
Lowest level of fear in Africa, Latin America, and the Caribbean.
Highest level of fear Asia, Oceana, and Europe.
*The United States falls somewhere in between.
Fear of Failure
A strong fear of failure is often rooted in one’s national culture. The Global Entrepreneurship Monitor report (GEM) measures fear of failure on a global level according to country. When you look at this on a map, you can also recognize regional differences. The GEM failure rate is based on those who admit to perceiving opportunities to start a business but feel prevented from acting on those opportunities due to fear of failure. The lower the percentage shown on the map, the lower the fear (see Figure 11.3).
Alex Heber, “Chart: The fear of failure rates for entrepreneurs around the world.” Business Insider Australia, (July 13, 2015) http://www.businessinsider.com.au/chart-the-fear-of-failure-rates-for-entrepenuers-around-the-world-2015-7 retrieved on December 12, 2015.
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Figure 11.3: Fear of Failure Rates Around the World
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Source: Global Entrepreneurship Monitor Adult Population Survey 2015
Figure 11.4: Self-Perceptions About Entrepreneurship
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Source: GEM 2015/2016 global report, Figure 5. Retrieved from http://gemconsortium.org/report
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Figure 11.5: Failure Fear Factor Around the World
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Figure 11.5: Failure Fear Factor Around the World
1.4 Learning From Failure
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Learning From Failure
Find your deeper purpose
Focus on others
Recognize when your approach is wrong
Learning From Failure
Eric Wagner, “9 Lessons From a 10-Time Startup Failure,” Forbes (October 22, 2013) http://www.forbes.com/sites/ericwagner/2013/10/22/9-lessons-from-a-10-time-startup-failure/ retrieved on December 12, 2015.
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Learning from Failure
Beware of “shiny object syndrome”
Fail fast…but not too fast
Find your formula
Know who you are
Learning From Failure
Eric Wagner, “9 Lessons From a 10-Time Startup Failure,” Forbes (October 22, 2013) http://www.forbes.com/sites/ericwagner/2013/10/22/9-lessons-from-a-10-time-startup-failure/ retrieved on December 12, 2015.
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Figure 11.6: Intelligent Failure
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11.5 Getting Gritty: Building a Tolerance for Failure
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Building Tolerance for Failure
Building grit
Courage
Conscientiousness
Perseverance
Resilience
Excellence
GETTING GRITTY
According to Duckworth, grit is the quality that enables people to work hard and sustain interest in their long-term goals. Grit is also related to resilience, not just in the face of failure, but in perseverance to stick to long-term commitments and goals.
Deborah Perkins-Gough, “The Significance of Grit: A Conversation with Angela Lee Duckworth,” ASCD—Educational Leadership http://www.ascd.org/publications/educational-leadership/sept13/vol71/num01/The-Significance-of-Grit@-A-Conversation-with-Angela-Lee-Duckworth.aspx retrieved on December 12, 2015.
Deborah Perkins-Gough, “The Significance of Grit: A Conversation with Angela Lee Duckworth,” ASCD—Educational Leadership http://www.ascd.org/publications/educational-leadership/sept13/vol71/num01/The-Significance-of-Grit@-A-Conversation-with-Angela-Lee-Duckworth.aspx retrieved on December 12, 2015.
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How do you think you’ll be able to take the lessons learned from your failures and use them to attain more success in the future?
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Table 11.3: Lessons Learned by Kurt Theobald
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Source: Wagner, E. (2013, October 22). 9 Lessons from a 10-time startup failure. Forbes. Retrieved from http://www.forbes.com/sites/ericwagner/2013/10/22/9-lessons-from-a-10-time-startup-failure/
Table 11.4: Five Lessons Learned from Entrepreneurial Mistakes
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Table 11.4: Five Lessons Learned from Entrepreneurial Mistakes
Your Failure Résumé
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Mindshift: Your Failure Résumé
In this Mindshift exercise, your assignment is to craft a “failure résumé” that includes all of your biggest fails! These can be from school, work, or even in social relationships. For every failure you list, you must then describe what you learned from each fail (and, if appropriate, what others learned). By creating a failure résumé, you are forced to spend time refl ecting on what you learned from those experiences. As tough as this sounds, it’s also a very rewarding experience.
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Mindshift: Your Failure Résumé
Want to go a step further? Share your résumé with a classmate and compare. Don’t focus on comparing the failures but rather focus on comparing and contrasting the learning that resulted from each failure experience.
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1. Was it easier than you expected, or more difficult, to list your biggest failures?
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MINDSHIFT: CRITICAL THINKING
2. What emotions did you experience as you wrote your “failure résumé”?
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MINDSHIFT: CRITICAL THINKING
3. How do you think you’ll be able to take the lessons learned from your failures and use them to attain more success in the future?
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MINDSHIFT: CRITICAL THINKING
